Monday, October 11, 2010

Andrea Horwath & The TTC

Y'know I kinda like Andrea Horwath. I'm certainly no socialist and I tend to disagree on everything the New Democratic Party has to say. But Andrea Horwath, the somewhat new Ontario NDP leader, has called out McGuinity's government on some pretty important issues. She's demanding an inquiry into the civil rights abuses during the G20, she's criticized the Smart Meters that have costs Ontarians more in electricity, and she was firmly against the HST. The NDP even provided figures and statistics to make their point about the HST.

Now if it sounds like I'm re-hatching something that might have been written for the Toronto Star it's because I am. What makes this post different is that I'm not going to endorse Horwath, or give any kind of support to the NDP.

And here's why:

The NDP has always been dedicated to socialism. Although they may call themselves social democrats and support small businesses, the underlying core of their platform is more government control. Not that the Liberals are any better; McGuinity promised to fund municipalities so they could transform their public transit systems and make progress and go green and move into the 21st century and all that jazz. Particularly in Toronto, where three different transit systems (streetcars, subways and buses) are underfunded after McGuinity pulled out $4 billion.

Clearly the best decision any government (municipal or provincial) can make is to privatize the Toronto Transit Commission (TTC). Toronto residents already pay for these services through fares so it's just a means of putting this money to better use. There's either a self-perpetuating bureaucracy tied to union workers and getting more funding, or a privately owned transit company who's best interests are in profit margins. If public transit was sold to multiple entrepreneurs who all of a sudden found themselves in competition with each other, they'd have to provide the best service at the cheapest cost to maintain their profits.

So where does Andrea Horwath come into play? Her NDP website says we need “practical solutions” to equip us with public transit challenges. She's even ridden the TTC around Toronto and talked to the people. While fares continue to rise it's taking longer and longer for residents to get from point A to point B. Simply put, the Toronto transit system is broken. But Horwath is wrong in her blame, while the $4 billion cut from McGuinity's government does damper the service, it was probably necessary for a government faced with a $200 billion debt and a fiscal year of $19.3 billion in the red.

Horwath hasn't addressed any of these issues. Now to be fair, it is sort of a municipal issue. And talk of privatization has come up with Toronto mayoral candidates. But the city always like to point to the shortcomings from the provincial government that's supposed to help fund the TTC. So would Horwath fund the TTC? Probably, but her NDP website doesn't actually point to how much. Instead it talks about “creating jobs.”

I don't feel I need to explain why the government cannot create jobs. But for the sake of any readers that may be supportive of Horwath or the NDP (or government spending in general) let me briefly outline why throwing money at problems won't solve anything.

All government money comes from taxation (well actually they could always print more money, but that's a different story). All tax money comes from the profits of the private sector. Now I don't mean profits from the Tim Horton's Corporation or rich old white men who resemble the Monopoly guy. The money I'm talking about is the wealth of the middle class. People who are self-employed or employed for some private business. This extra money comes from the profits of the company, the profits they get for doing a good job. Regardless of some extremist views, one man's profit is not another man's loss. As the company grows more efficient (thus richer) the employees make more money. They use this money to buy things they like, invest back into the economy, or donate to charities.

The problem arises when the government steps in and takes some of this private wealth for its own use. Now on the onset, some people may be fine with this. Allow the government to provide some basic services and I don't mind paying this tax. But after awhile as taxes don't cover costs, service fees (such as bus fares) are brought into the situation. Eventually the organization in charge of this service (the TTC) is incapable of maintaining a high level of service for a low cost. The lack of competition and the lack of market prices create economic calculation problems. Despite the intelligence of TTC planners (assuming their all really smart) there isn't enough information to decide if they're correctly allocating resources to best fit the need of TTC users and employees. Only a free market can do this.

Eventually, like all other government organizations, the employees become only interested in job security. Making sure they have jobs and making sure just enough problems persist as to justify their employment. Not that public service workers are evil people looking to destroy the province, they're just people like you and me trying to make a living. But we can see how non-for-profit government entities are self-perpetuating and only end up raising the costs of their services.

With this said when Horwath comes in and talks about “creating jobs” to improve the transit system we can see how this will only worsen the situation.

Whether the TTC builds more stations, rails, or hires one hundred more drivers, the results are going to be the same: more tax money is going to be directed to cover these costs, as well as higher bus fares. Without free market competition there's no mechanism to prove this was a correct allocation of resources, even if the service is improved. An improved TTC service could mean less funding for OHIP or less money in the pocket of a cash strapped middle class family.

The jobs Horwath are talking about are jobs that are immediately seen. If the $4 billion cut by McGuinity went into the pockets of Ontarians, then unseen jobs were created. Jobs made by the private sector -- men and women who found themselves taxed less and were able to invest back into their business or into the economy as a whole. If Horwath were to create more TTC jobs, those individual workers would be better off, but it would be at the expense of taxpayers.

I believe that Andrea Horwath is sincere about fixing this province. She's sincere about helping out those individuals and families that have been hit hard by our economic troubles.

Unfortunately a majority of our economic troubles don't come from a burst bubble in the US, but our own government incompetence and the economic illiteracy of the public. If Horwath wants to keep the costs of public transit low, and make the service more efficient, the first thing that needs to be done is a complete privatization without the baggage of Union workers demanding wages that the market can't bare.

Unfortunately for Horwath she's the leader of a party built around union and public service workers. The prospect of a privatized transit system for all of Ontario (why stop at Toronto?) seems far from the NDP platform. It really is unfortunate too, for nothing would spur job creation like a group of five or six entrepreneurs buying Toronto's depleted transit system and using profit incentive to expand and increase service for Toronto residents. Surely this makes more sense than throwing more money at central planners not tied to any market forces.